What would you do if you were in Yoshinoya’s place?
Yoshinoya, of course, is Yoshinoya Holdings Company, operator of Japan’s largest chain of beef-bowl restaurants. A heaping bowl of beef and rice (gyudon) is yours for a mere 380 yen, and so popular has the formula proved that precisely a year ago, with the economy on the brink of collapse and workers being thrown out of work by the tens of thousands, the chain, seeing opportunity in mass misery, laid plans to open 100 new outlets. High-end restaurants were racking up Michelin Guide stars but losing customers. The action was at Yoshinoya and its price-slashing competitors.
The competitors, their ranks growing and their prices falling, are the rub. Yoshinoya has no monopoly on budget dining. Sukiya, to cite just one example, offers 280 yen gyudon. So what should Yoshinoya do, asks Shukan Gendai (Dec 26–Jan 2). Lower its prices? Or leave them, hoping customers will accept that the quality is worth it?
It’s a dilemma the Japanese of 20 years ago could scarcely have imagined. Before the 1980s bubble economy burst, high prices, not low, were the consumer’s delight. Gold-flecked sushi is the enduring symbol of those days and their reckless disregard for the most elementary economic prudence. Now the struggle is to dine and clothe oneself on pocket change.
Uniqlo is to clothing what Yoshinoya is to dining. It soars from success to success on the strength of its unpretentiously artful designs and shockingly low prices. Recession? What recession?
If Uniqlo’s place in the sun seems assured for now, Yoshinoya’s, though its sales have risen for 28 months straight, is less so, and so we return to Shukan Gendai’s question. What course should it take?
Disagreement among the experts the magazine consults highlights the uncertainties involved -- there are no certified answers, clear if only you’re clever and qualified enough. Lower prices, recommends consultant Kazunori Komiya. “Customers,” he says, “judge companies on the basis of ‘QPS’ -- quality, price, service. If there are a Yoshinoya restaurant and another gyudon outlet in the same neighborhood, most customers probably feel there won’t be much difference with regard to Q and S. That leaves P, and a 100 yen difference will probably be decisive.”
Yes, but, says Asia University economist Shintaro Mogi, that contradicts Yoshinoya surveys which suggest that if you lower prices beyond a certain point, customers get suspicious. “If I was president of Yoshinoya,” Mogi continues, “I would pay attention to what my customers want, and what they want is for Yoshinoya to be the top brand in its sector.”
There’s another point to consider, Shukan Gendai hears from economist Yoshio Yoshimoto. If Yoshinoya lowers its prices, he says, competitors will follow suit, until finally doing business loses its economic point. That is the shadow deflation casts on the economy of a nation struggling to stay afloat.© Japan Today